Silvio Berlusconi has denied accusations that he paid a teenage runaway for sex. The Italian prime minister said on Monday he gave €45,000 (£39,700) to Karima el Mahroug, a belly dancer who uses the name Ruby, to help her launch a beauty centre, complete with a laser hair-removing machine, so that she could escape a life of prostitution. "The girl told a very painful and moving story," he said. Berlusconi is on trial for using an underage prostitute because prosecutors believe he had sex with Mahroug in 2010 when she was 17, a year younger than the legal age for prostitution in Italy. He is also accused of coercing police into freeing Mahroug when she was arrested last year on suspicion of theft.

Berlusconi repeated his claim that he had mistakenly believed Mahroug could be the granddaughter of former Egyptian leader, Hosni Mubarak. He told police so after her arrest to avoid "a diplomatic incident".

Anna Finocchiaro, a senator with the opposition Democratic Party, said that if Berlusconi had really believed Mahroug was the close relative of a world leader, it was difficult to believe he showered her with money to save her from a life of vice. "Once again Berlusconi has managed to transform something grave and serious into a ridiculous comedy that is simply sad," she said.

The trial is one of four proceedings Berlusconi faces in Milan. Arriving on Monday for a hearing in his trial for fraud at his TV company, Berlusconi was greeted by a group of 200 cheering supporters bussed in for the day and handed free salami sandwiches.

As the supporters filled the street outside the court waving balloons saying "Silvio, resist!", Berlusconi was handed a microphone and told his supporters he was the victim of "mud slinging" by magistrates "who don't work for their country but against their country".

Apart from the prostitution and TV rights fraud trial, Berlusconi is on trial for allegedly bribing British lawyer David Mills. Prosecutors have also requested he face trial in a second TV fraud case. Berlusconi has said he is innocent of all charges. Asked on Monday if he could be convicted, he replied "No way – you must be dreaming."

The prime minister's supporters in parliament are meanwhile pushing through a measure which would shorten the statute of limitations in trials where the defendant has no criminal record, such as Berlusconi. If passed, critics say the measure would cut months off the time left available to wrap up Berlusconi's bribery trial. Already due to be beyond prosecution by January 2012, the trial, they argue, would effectively be killed off for lack of time.